Turkey’s leading fintech Papara, has officially announced the complete acquisition of Pakistani fintech SadaPay, marking its expansion in the South Asian market.
This acquisition is a significant step for Papara, which became Turkey‘s first fintech unicorn in 2023 after acquiring the Spanish fintech Rebellion and expanding into Europe. Papara, valued at nearly US$2 billion, currently has a user base of 20 million.
Papara CEO Emre Kenci confirmed that the company purchased 100% shares of Pakistan-based SadaPay in line with their global expansion strategy. “This acquisition marks a significant strategic expansion into the Middle East and South Asia markets,” the company said. “We’re taking our robust technology, business know-how, and user-centric culture to a geography of 1 billion people,” the Istanbul-based fintech said in a statement.
‘Most significant fintech investment’ in Pakistan
Emre Kenci emphasized the significance of the acquisition, stating, “This acquisition marks one of the most significant fintech investments in the country in recent years. We aim to position SadaPay as the leading fintech player in the region by bolstering its innovative and bold initiatives with Papara’s business know-how, robust technology, and user-centric culture.”
This investment marks a major boost for the Pakistani fintech sector and the general startup ecosystem that has been struggling amid a global funding crunch.
SadaPay founder and CEO Brandon Timinsky said the acquisition enables SadaPay to “leverage Papara’s industry expertise, advanced technology platform, and diverse product offerings.” He added that SadaPay’s strong brand and exceptional team “will significantly accelerate the pace at which we can deliver value to Pakistan’s quarter-billion citizens.”
Key points from acquisition deal
The acquisition is strategically beneficial for both Papara and SadaPay. Papara gains swift access to the Pakistani market, aligning with its broader expansion plans into the Middle East and South Asia. For SadaPay, this means access to Papara’s technology and financial resources required to bolster its position in Pakistan’s fintech sector.
- Market landscape: The Papara acquisition will solidify SadaPay’s position as a leading player in Pakistan’s fintech space.
- Financial aspects: As part of the deal, Papara will invest $10 million into the startup, marking a major boost for the Pakistani fintech sector.
- Valuation: Although the valuation of the acquisition has not been publicly disclosed, local media reports indicate that the all-stock deal is valued at approximately $30 million. An all-stock deal means the acquiring company pays with its stock. In this case, SadaPay will receive Papara stocks for selling the company, rather than cash.
- In April 2022, SadaPay was valued at $43-64 million by Dealroom.com.
SadaPay story
Founded in 2019 by Brandon Timinsky, SadaPay quickly became one of the fastest-growing electronic money institutions (EMIs) worldwide, reaching 1 million users in record time.
Today, the company processes $1.5 billion in annual payment volume and offers a variety of financial services, including peer-to-peer money transfers, debit cards, and payment products. SadaPay was the first to introduce a numberless debit card in the Middle East and Asia (MEA) region through a partnership with Mastercard, positioning itself as a pioneer in Pakistan’s financial landscape.
Since its inception, SadaPay has raised $20 million in equity funding, with Recharge Capital and Kingsway Capital leading the two most recent rounds.
What’s ahead for SadaPay?
Post-acquisition, SadaPay will continue its operations in Pakistan independently under its existing brand and team. The $10 million immediate injection by Papara could provide much-needed capital for growth and technological advancements to expand the consumer base and introduce new innovative services.
Approval from Pakistan’s central bank indicates regulatory confidence in the deal, which is good news for SadaPay and its future ambitions, including the potential to secure a digital retail bank license. The State Bank of Pakistan (SBP) offers two types of licenses as part of its regulatory framework for digital banks in Pakistan: Digital Retail Bank (DRB) and Digital Full Bank (DFB). DRBs focus on retail customers, while DFBs cater to both retail customers and business entities.
Looking ahead, Kenci highlighted Pakistan’s potential, driven by its growing population, which is projected to make it one of the largest economies in the next 50 years. Papara aims to establish SadaPay as a leading player in the regional fintech landscape by incorporating its business acumen, advanced technology, and customer-centric culture.
What can SadaPay users expect post-acquisition?
Following the acquisition, SadaPay is set to gain access to Papara’s technological infrastructure and a wide array of financial services. This means SadaPay users in Pakistan may get access to services such as various card options, loyalty programs, multi-currency accounts, automated savings, investment and wealth management tools, insurance offerings as well as remittance services. With these new offerings, SadaPay can swiftly boost its standing in the market and expand its range of products.
“This acquisition will bring cutting-edge technology and financial expertise to SadaPay, empowering it to deliver top-tier mobile banking services to millions of Pakistanis and making financial transactions faster, simpler, and more accessible,” SadaPay said in a statement.
What does it mean for Pakistan’s fintech sector?
With 240 million people and approximately 70% under the age of 35, Pakistan ranks as the world’s fifth most populous country. This youthful demographic presents significant prospects for financial inclusion as well as innovation.
The State Bank of Pakistan’s (SBP) Quarterly Payment Systems Review for the second quarter of fiscal year 2023-24 highlighted significant progress in the country’s payment ecosystem. According to this report:
- Pakistan witnessed substantial growth in mobile and internet banking, with user numbers reaching 16 million and 11 million, respectively.
- E-wallet registrations surged by 15% to 2.7 million, indicating a robust shift towards digital finance.
- One key trend in the SBP report is the consistent increase in mobile app and internet banking adoption, representing 50% of total digital transactions.
- Government initiatives like the RAAST instant payment system signify efforts toward establishing Pakistan as a cashless economy.
In this scenario, the acquisition of SadaPay by Papara signifies a significant milestone for the Pakistani fintech sector. With Papara’s entry into the market and its substantial investment in SadaPay, there is a clear indication of growing investor confidence in Pakistan’s fintech landscape.
Papara’s infusion of capital and expertise is also expected to bring advanced financial solutions, which could enhance consumer experiences and drive further advancements in Pakistan’s fintech ecosystem.
